Why are there so many bad choices in health insurance?
Should I buy health insurance for my family? How much do I need? How much should I buy? How much can I afford? Every fall, millions of Americans struggle with these and related decisions. We are told that choice empowers consumers. In practice, the many options for provider network, medication coverage and benefit design are overwhelming and confusing.
Other wealthy nations do not ask families to become actuaries every 12 months. In England, France, and Germany, enrollment is nearly automatic. You do not “shop” for health insurance. You are simply covered. These countries do not tolerate millions of uninsured citizens. They spend less, achieve better health outcomes, and report higher levels of satisfaction with their health care systems.
Here, we log on to Medicare Advantage sites, employer portals, or the Affordable Care Act (ACA) marketplaces only to confront endless options, but few good ones. The problem is not that we lack choice. It is that the choices themselves are designed to be confusing, risky, and often financially perilous. We are compelled to navigate co-payments, deductibles, coinsurance, networks, and formularies on the way to selecting a plan that might fit our needs and budget.
Consider what a family faces on the ACA marketplace. Most shoppers focus on the premium, the monthly fee paid regardless of whether they use care. A typical Bronze plan for a family costs about $14,000 to $16,000 per year. If a serious illness arises, the family can quickly hit the federal out-of-pocket maximum—$21,200 for 2025—before insurance fully covers additional care. In the worst case, a family with a serious medical condition, could owe over $35,000 when premiums and cost-sharing are combined. Congress had temporarily softened these burdens by expanding ACA subsidies for lower-income households. With those subsidies now expired, millions of families once again face this grim arithmetic.
If you can predict that your family’s medical expenses will exceed $35,000 next year, then health insurance is a sure bet. Most families don’t know but would like to be covered against catastrophic medical conditions. We are given a choice of metal tiers, Bronze, Silver, Gold, and Platinum to reflect different balances of premium and cost sharing. Cost sharing consists of deductibles, coinsurance and copayment for each service that add up to the maximum out of pocket cost. Most of the time, the cost-sharing of medical expenses is far less than the maximum out-of-pocket limit. But how can you estimate your future needs? Which metal tier provides the best value for your family? You have to make an educated guess.
People with employer-sponsored insurance face similar choices. Even with the employer contribution, subscribers often face high deductibles and other cost-sharing. Most households cannot cover a $2,000 unexpected bill, let alone a deductible two or three times that size. It is no surprise that medical issues—whether the bills themselves or the loss of income from illness—are implicated in a majority of personal bankruptcies.
Why should anyone be compelled to make such complex and consequential decisions?
Other nations show that complexity is a choice, not a necessity. In England’s National Health Service, residents register with a general practitioner, not an insurance company. There are no networks to decode, no premiums to compare, and no added costs for most services. France automatically enrolls all residents in its national plan and offers standardized, inexpensive supplemental coverage. Germany’s nonprofit sickness funds compete on service, not on benefit design; choosing among them is more like choosing a bank than selecting a U.S. health plan. In these systems, the risk of choosing wrong is essentially nonexistent.
These countries have different histories and politics, but they share one insight Americans have not yet absorbed: health insurance works best when the consumer is not forced to navigate a maze of options with life-altering financial consequences. Their systems reflect an understanding of human psychology. Ours ignores it. By placing the burden of complexity on families, we mistake chaos for choice.
The current system of health insurance offers the illusion of choice while shifting financial risk squarely onto households. Insurers, acting rationally within a flawed set of rules, compete by lowering premiums in ways that raise deductibles, narrow networks, or increase obstacles to care.
If some families choose to opt out of purchasing health insurance, the pool of families paying premiums becomes smaller and next year’s premiums become higher. When the process continues over several years, the insurance becomes unaffordable. Insurers call this a death spiral. If we are not already there, we will be there soon.
Finally, we should recognize that genuine choice in health coverage does not come from offering dozens of nearly indistinguishable plans. It comes from ensuring that families can access care without fear of financial catastrophe—whether through private insurers, a public option, or something more ambitious.
In the 1983 film War Games, a young programmer discovers that a defense supercomputer has mistaken a simulation for reality and is rapidly escalating toward nuclear launch. The system is executing precisely as it was designed—yet the outcome is sure to be catastrophic. Only when the programmer forces the machine to play repeated games of tic-tac-toe does it recognize the deeper truth: some competitions have no winners. Faced with an unwinnable scenario, the computer stops the countdown and concludes, “The only winning move is not to play.”
Our health care system is trapped in a similar feedback loop. Consumers, insurers, employers, and regulators are all acting within the incentives they are given, yet the collective result is unsustainable costs and worsening insecurity. The only winning move is to stop playing this version of the insurance game and redesign the rules entirely. Other nations have done so. If we refuse, the results will be catastrophic.